Fast-growing economies like China, India, Indonesia, and Vietnam cannot afford to fall into the middle income trap when seeking to move from resource-driven growth that is dependent on cheap labour and capital to growth based on high productivity and innovation, said the Draft Report, “Asia 2050 - Realizing the Asian Century,” released by the Asian Development Bank (ADB) at its 44th Annual Meeting of the Board of Governors.
The draft report says that as the global economy’s centre of gravity shifts toward Asia, the region could account for about 50 percent of global output in 2050, up from the current 27 percent, as well as half of global trade and investment.
The draft report compares the potential outcomes for Asia under two competing scenarios: the Asian Century and the Middle Income Trap. In the more optimistic Asian Century scenario, the region’s gross domestic product (GDP) would soar to US$148 trillion and account for 51 percent of global output in 2050. On a purchasing power parity basis, GDP per capita in Asia would rise to US$38,600, compared with the projected 2050 global average of US$36,600.
The report also identifies six key drivers of transformation in the region: technical progress, capital accumulation, demographics and the labour force, the emerging middle class, climate change mitigation and the competition for resources, and the communications revolution.
In its march toward prosperity, Asia faces several key challenges and risks. Yawning inequalities must be narrowed and - as home to over half of the world’s population - Asia must confront a massive wave of urbanization and changing demographic profiles.
Asia’s long-term competitiveness will depend heavily on how it controls the intensity of its resource use, including water and food, and manages its carbon footprint. It is in Asia’s best interest to encourage and invest in innovation and clean technology to maintain its impressive growth momentum.
The report says there is the great challenge of governance and institution building - an Achilles heel for most Asian economies. Asia must modernize its governance systems and retool its institutions to ensure transparency, accountability, and the enforceability of rules and regulations.
These issues are not mutually exclusive and could impact one another in ways that multiply existing tensions or even create new difficulties that could threaten Asia’s rapid growth, as well as its stability and security.
To meet these challenges, Asian leaders need to devise bold and innovative national policies while pursuing regional and global cooperation to successfully manage regional public goods, energy security, infrastructure connectivity, food supplies and water resources, and to maintain long-term peace and stability.
The alternative scenario assumes that Asia’s fast-growing economies like China, India, Indonesia, and Vietnam will fall into the middle income trap of slowing growth rates and stagnating income levels over the next 5 to 10 years. Furthermore, none of Asia’s slow-growing economies would manage to accelerate its growth rate under this scenario. If these events occur, Asia would account for only 32 percent, or US$61 trillion, of global GDP in 2050. On a purchasing power parity basis, GDP per capita would rise to only US$20,300, or just over half of that under the Asian Century scenario.
Under the Asian Century scenario, almost 3 billion additional Asians would enjoy the fruits of prosperity at least one generation earlier than under the Middle Income Trap scenario.
Quynh Anh
Vietnamese
